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BPM and Decision Management for Smarter, Simpler and More Agile Processes

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Decision Management Solutions
Decision Management Solutions

How to use Decision Management, business rules and predictive analytics to simplify and improve business processes.

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BPM and Decision Management for Smarter, Simpler James Taylor, and More Agile CEO Processes @jamet123 #decisionmgt
The benefits of BPM Operational Consistency Customer experience Costs Business agility Continuous Improvement ©2012 Decision Management Solutions 2
Complexity is the enemy Harder to assure quality Dislike long processes More expensive Hard to change safely Hard to apply learning ©2012 Decision Management Solutions 3
AGENDA 1 2 What causes complexity Eliminating complexity 3 Decision Management Systems 4 5 6 Business Rules Predictive A final thought Analytics
What causes complexity?
Age<21 Accept low-risk applicant 21<=Age<50 Process medium-risk applicant Age>50 Decline high- risk applicant ©2012 Decision Management Solutions 6
Age<21 Accept low-risk applicant Previous Heart Attack, Decline high- Existing Cancer risk applicant 21<=Age<50 Process medium-risk Good Medical Record applicant Age>50 ©2012 Decision Management Solutions 7
Age<21 Accept low-risk applicant Previous Heart Attack, Decline high- Existing Cancer risk applicant 21<=Age<50 Process medium-risk Good Medical Record applicant Age>50 New Customer 1 or fewer Claims Multiple Claims Long-standing Customer ©2012 Decision Management Solutions 8
Age<21 No Class I or II sports Accept low-risk applicant Class II sport Previous Heart Attack, Decline high- Existing Cancer risk applicant 21<=Age<50 Class I sport Process medium-risk Good Medical Record applicant Age>50 1 or fewer Claims Multiple Claims New Customer Long-standing Customer ©2012 Decision Management Solutions 9
Embedded decisions cause complexity Age<21 No Class I or II sports Accept low-risk applicant Class II sport Previous Heart Attack, Decline high- Existing Cancer risk applicant 21<=Age<50 Class I sport Process medium-risk Good Medical Record applicant Age>50 1 or fewer Claims Multiple Claims New Customer Long-standing Customer ©2012 Decision Management Solutions 10
Many similar processes cause complexity ©2012 Decision Management Solutions 11
Local exceptions cause complexity ©2012 Decision Management Solutions 12
Eliminating Complexity with Decision Management
Case: Fortune 20 Call Center Business challenges Solution Benefits Complex manual Identify and extract Consistent, accurate processes decisions from customer interactions processes Cheat sheets and Decisions earlier in online policy manuals Automate and processes simplify manage decisions interactions Irritating repetition for customers E.g. Blackberry Empowered level 1 Email, Billing support Inconsistency of Issues, International answers Travel
Case: Government Agency ©2012 Decision Management Solutions 15
Case: Global Manufacturer Business challenges Solution Benefits Supplier onboarding Extract “Validate 50% reduction in time consuming and Supplier” decision supplier onboarding manual time Automate and Standard process manage using All local variations across 175 business rules supported countries—hundreds Genuinely global “Intelligent” self- of local exceptions process service applications 3,000 supplier updates a month
Embedded decision complexity Age<21 No Class I or II sports Accept low-risk applicant Class II sport Previous Heart Attack, Decline high- Existing Cancer risk applicant 21<=Age<50 Class I sport Process medium-risk Good Medical Record applicant Age>50 1 or fewer Claims Multiple Claims New Customer Long-standing Customer ©2012 Decision Management Solutions 17
Separate decision, simpler process Low risk Process low- risk applicant Medium risk Process Determine medium-risk applicant type applicant High risk Process high- risk applicant Class I Class II New # Age sports sports Heart Attack? Cancer? Customer? Claims Action <21 N N Low Risk <21 Y High Risk <21 Y N Medium Risk 21 - 50 Y High Risk 21 - 50 Y High Risk 21 - 50 N N Medium Risk >50 Y High Risk >50 N <2 Medium Risk >50 N >1 High Risk ©2012 Decision Management Solutions 18
Decision Management is the proven approach used to manage decisions independently of processes
Decisions Making choices or selections and taking action ©2012 Decision Management Solutions 20
Benefits from independent decisions Simpler Higher processes productivity that are and resource easier to utilization manage Easier to use Enables analytic continuous insights for improvement better of results decisions ©2012 Decision Management Solutions 21
Separation adds agility Matched change cycle v1 v2 v3 v4 v5 v1 v2 v3 v4 v5 Variable change cycle v1 v2 v1 v2 v3 v4 v5 v6 Stable business process v1 v1 v2 v3 v4 v5 ©2012 Decision Management Solutions 22
Decisions are high change components Regulations change Change to keep eligibility decisions compliant Policies change Change validation to track new data requirements Competitors change Change the discount to remain competitive Markets change Change the assessment to manage risk Consumer behavior Change to keep selecting the changes right deal terms Fraudsters adapt Change the routing to focus on new fraud ©2012 Decision Management Solutions 23
Case: Beauty Retailer Business challenges Solution Benefits Inflexible loyalty POS rules-based Four-fold increase in program calculation of loyalty promotion agility discounts Costly and labor- 20% lift in sales in intensive campaign Automated loyalty one year implementation offers delivered Reduced costs through re-printable Confusing and time- card Improved customer consuming for in-store experience staff Business definition and management of campaigns
Decision Management Systems
Suitable decisions Repeatable Non trivial Measurable Candidate business for impact automation ©2012 Decision Management Solutions 26
Operational decisions everywhere ©2012 Decision Management Solutions 27
Decision Management Systems… Keep the Are decision in transparent mind and agile Are Test, learn, predictive and improve not reactive ©2012 Decision Management Solutions 28
3 Steps to Decision Management Discover Build Improve ©2012 Decision Management Solutions 29
Business Rules
Manage the rules of decisions Decision ©2012 Decision Management Solutions 31
Unmanageable business rules public class Application { private Customer customers[]; private Customer goldCustomers[]; ... public void checkOrder() { for (int i = 0; i < numCustomers; i++) { Customer aCustomer = customers[i]; if (aCustomer.checkIfGold()) { numGoldCustomers++; goldCustomers[numGoldCustomers] = aCustomer; if (aCustomer.getCurrentOrder().getAmount() > 100000) aCustomer.setSpecialDiscount (0.05); } } } ©2012 Decision Management Solutions 32
Clarity and transparency are needed If customer is GoldCustomer and Home_Equity_Loan_Value is more than $100,000 then college_loan_discount = 0.5% If member has greater than 3 prescriptions and prescription’s renewal_date is less than 30 days in the future then set reminder=“email” If patient’s age is less than 18 and member’s coverage is “standard” and member’s number_of_claims does not exceed 4 then set patient’s coverage to “standard” ©2012 Decision Management Solutions 33
The power of a BRMS Design Transparency Execution Transparency Collaboration Impact Analysis Platform for analytics © Decision Management Solutions, 2012 34
Case: North American Life Insurer Business challenges Solution Benefits Re-engineering Manage Clear where in legacy systems and processes, decisions processes the rules manual processes and rules are applied Business users Decompose decision Business and IT collecting and points to understand collaboration managing business decisions improved rules Map decisions to Focused vocabulary IT disconnect over vocabulary and and rule harvesting application of rules business rules efforts Map decisions to KPIs Traceability
Predictive Analytics
Three kinds of Predictive Analytics Risk Fraud Opportunity ©2012 Decision Management Solutions 37
Predictive Analytics turn uncertainty about the future into usable probabilities
Embed Predictive Analytics ? ? Decision ©2012 Decision Management Solutions 39
Case study: Specialty Insurer Business challenges Solution Benefits 12,000 claims a Business rules and Loss ratio expense month predictive analytics from 14% to 11% Reduce staff by 25% Automatically identify 32% higher in a recession and subrogation subrogation returns lower expenses opportunities $10M/year additional Reduce fraud and Increase Fast Track subrogation returns improve subrogation rate from 2% to 22%
A final thought
Begin with the Decision in mind Find the decisions that matter to your business and focus on them as well as your processes. ©2012 Decision Management Solutions 42
Questions? James Taylor, CEO jtaylor@decisionmanagementsolutions.com 43

More Related Content

BPM and Decision Management for Smarter, Simpler and More Agile Processes

  • 1. BPM and Decision Management for Smarter, Simpler James Taylor, and More Agile CEO Processes @jamet123 #decisionmgt
  • 2. The benefits of BPM Operational Consistency Customer experience Costs Business agility Continuous Improvement ©2012 Decision Management Solutions 2
  • 3. Complexity is the enemy Harder to assure quality Dislike long processes More expensive Hard to change safely Hard to apply learning ©2012 Decision Management Solutions 3
  • 4. AGENDA 1 2 What causes complexity Eliminating complexity 3 Decision Management Systems 4 5 6 Business Rules Predictive A final thought Analytics
  • 6. Age<21 Accept low-risk applicant 21<=Age<50 Process medium-risk applicant Age>50 Decline high- risk applicant ©2012 Decision Management Solutions 6
  • 7. Age<21 Accept low-risk applicant Previous Heart Attack, Decline high- Existing Cancer risk applicant 21<=Age<50 Process medium-risk Good Medical Record applicant Age>50 ©2012 Decision Management Solutions 7
  • 8. Age<21 Accept low-risk applicant Previous Heart Attack, Decline high- Existing Cancer risk applicant 21<=Age<50 Process medium-risk Good Medical Record applicant Age>50 New Customer 1 or fewer Claims Multiple Claims Long-standing Customer ©2012 Decision Management Solutions 8
  • 9. Age<21 No Class I or II sports Accept low-risk applicant Class II sport Previous Heart Attack, Decline high- Existing Cancer risk applicant 21<=Age<50 Class I sport Process medium-risk Good Medical Record applicant Age>50 1 or fewer Claims Multiple Claims New Customer Long-standing Customer ©2012 Decision Management Solutions 9
  • 10. Embedded decisions cause complexity Age<21 No Class I or II sports Accept low-risk applicant Class II sport Previous Heart Attack, Decline high- Existing Cancer risk applicant 21<=Age<50 Class I sport Process medium-risk Good Medical Record applicant Age>50 1 or fewer Claims Multiple Claims New Customer Long-standing Customer ©2012 Decision Management Solutions 10
  • 11. Many similar processes cause complexity ©2012 Decision Management Solutions 11
  • 12. Local exceptions cause complexity ©2012 Decision Management Solutions 12
  • 14. Case: Fortune 20 Call Center Business challenges Solution Benefits Complex manual Identify and extract Consistent, accurate processes decisions from customer interactions processes Cheat sheets and Decisions earlier in online policy manuals Automate and processes simplify manage decisions interactions Irritating repetition for customers E.g. Blackberry Empowered level 1 Email, Billing support Inconsistency of Issues, International answers Travel
  • 15. Case: Government Agency ©2012 Decision Management Solutions 15
  • 16. Case: Global Manufacturer Business challenges Solution Benefits Supplier onboarding Extract “Validate 50% reduction in time consuming and Supplier” decision supplier onboarding manual time Automate and Standard process manage using All local variations across 175 business rules supported countries—hundreds Genuinely global “Intelligent” self- of local exceptions process service applications 3,000 supplier updates a month
  • 17. Embedded decision complexity Age<21 No Class I or II sports Accept low-risk applicant Class II sport Previous Heart Attack, Decline high- Existing Cancer risk applicant 21<=Age<50 Class I sport Process medium-risk Good Medical Record applicant Age>50 1 or fewer Claims Multiple Claims New Customer Long-standing Customer ©2012 Decision Management Solutions 17
  • 18. Separate decision, simpler process Low risk Process low- risk applicant Medium risk Process Determine medium-risk applicant type applicant High risk Process high- risk applicant Class I Class II New # Age sports sports Heart Attack? Cancer? Customer? Claims Action <21 N N Low Risk <21 Y High Risk <21 Y N Medium Risk 21 - 50 Y High Risk 21 - 50 Y High Risk 21 - 50 N N Medium Risk >50 Y High Risk >50 N <2 Medium Risk >50 N >1 High Risk ©2012 Decision Management Solutions 18
  • 19. Decision Management is the proven approach used to manage decisions independently of processes
  • 20. Decisions Making choices or selections and taking action ©2012 Decision Management Solutions 20
  • 21. Benefits from independent decisions Simpler Higher processes productivity that are and resource easier to utilization manage Easier to use Enables analytic continuous insights for improvement better of results decisions ©2012 Decision Management Solutions 21
  • 22. Separation adds agility Matched change cycle v1 v2 v3 v4 v5 v1 v2 v3 v4 v5 Variable change cycle v1 v2 v1 v2 v3 v4 v5 v6 Stable business process v1 v1 v2 v3 v4 v5 ©2012 Decision Management Solutions 22
  • 23. Decisions are high change components Regulations change Change to keep eligibility decisions compliant Policies change Change validation to track new data requirements Competitors change Change the discount to remain competitive Markets change Change the assessment to manage risk Consumer behavior Change to keep selecting the changes right deal terms Fraudsters adapt Change the routing to focus on new fraud ©2012 Decision Management Solutions 23
  • 24. Case: Beauty Retailer Business challenges Solution Benefits Inflexible loyalty POS rules-based Four-fold increase in program calculation of loyalty promotion agility discounts Costly and labor- 20% lift in sales in intensive campaign Automated loyalty one year implementation offers delivered Reduced costs through re-printable Confusing and time- card Improved customer consuming for in-store experience staff Business definition and management of campaigns
  • 26. Suitable decisions Repeatable Non trivial Measurable Candidate business for impact automation ©2012 Decision Management Solutions 26
  • 27. Operational decisions everywhere ©2012 Decision Management Solutions 27
  • 28. Decision Management Systems… Keep the Are decision in transparent mind and agile Are Test, learn, predictive and improve not reactive ©2012 Decision Management Solutions 28
  • 29. 3 Steps to Decision Management Discover Build Improve ©2012 Decision Management Solutions 29
  • 31. Manage the rules of decisions Decision ©2012 Decision Management Solutions 31
  • 32. Unmanageable business rules public class Application { private Customer customers[]; private Customer goldCustomers[]; ... public void checkOrder() { for (int i = 0; i < numCustomers; i++) { Customer aCustomer = customers[i]; if (aCustomer.checkIfGold()) { numGoldCustomers++; goldCustomers[numGoldCustomers] = aCustomer; if (aCustomer.getCurrentOrder().getAmount() > 100000) aCustomer.setSpecialDiscount (0.05); } } } ©2012 Decision Management Solutions 32
  • 33. Clarity and transparency are needed If customer is GoldCustomer and Home_Equity_Loan_Value is more than $100,000 then college_loan_discount = 0.5% If member has greater than 3 prescriptions and prescription’s renewal_date is less than 30 days in the future then set reminder=“email” If patient’s age is less than 18 and member’s coverage is “standard” and member’s number_of_claims does not exceed 4 then set patient’s coverage to “standard” ©2012 Decision Management Solutions 33
  • 34. The power of a BRMS Design Transparency Execution Transparency Collaboration Impact Analysis Platform for analytics © Decision Management Solutions, 2012 34
  • 35. Case: North American Life Insurer Business challenges Solution Benefits Re-engineering Manage Clear where in legacy systems and processes, decisions processes the rules manual processes and rules are applied Business users Decompose decision Business and IT collecting and points to understand collaboration managing business decisions improved rules Map decisions to Focused vocabulary IT disconnect over vocabulary and and rule harvesting application of rules business rules efforts Map decisions to KPIs Traceability
  • 37. Three kinds of Predictive Analytics Risk Fraud Opportunity ©2012 Decision Management Solutions 37
  • 38. Predictive Analytics turn uncertainty about the future into usable probabilities
  • 39. Embed Predictive Analytics ? ? Decision ©2012 Decision Management Solutions 39
  • 40. Case study: Specialty Insurer Business challenges Solution Benefits 12,000 claims a Business rules and Loss ratio expense month predictive analytics from 14% to 11% Reduce staff by 25% Automatically identify 32% higher in a recession and subrogation subrogation returns lower expenses opportunities $10M/year additional Reduce fraud and Increase Fast Track subrogation returns improve subrogation rate from 2% to 22%
  • 42. Begin with the Decision in mind Find the decisions that matter to your business and focus on them as well as your processes. ©2012 Decision Management Solutions 42
  • 43. Questions? James Taylor, CEO jtaylor@decisionmanagementsolutions.com 43

Editor's Notes

  1. BPM and Decision Management for Smarter, Simpler and More Agile ProcessesOne of the prime causes of over-complex processes is the inclusion of decision-making in process designs. Organizations that identify the decisions in their processes and manage them as peers – not part of the process but supporting it – find they can simplify process designs, increase agility and bring business users and IT into better alignment.James Taylor will build on real case studies to show you how streamlining decision management can deliver simpler, more manageable processes to enhance efficiency.
  2. Harder to assure qualityCustomers don’t like long processesMore expensiveHard to make changes safelyHard to find places to apply learning
  3. Problem: process changes when decisions are madeSolution: Put the customer or transaction firstDecide first, process secondBuild a process based on a decisionPut the customer/transaction at the center
  4. Simpler processes that are much easier to manage Higher employee productivity and resource utilization International travel wizardBillingTech support and troubleshooting
  5. Problem: process changes when decisions are madeSolution: Put the customer or transaction firstDecide first, process secondBuild a process based on a decisionPut the customer/transaction at the center
  6. Payment methods Bank details Tax numbersWithholding taxBusiness partner roles DUNS numbersVendor returns
  7. Decisions involve choices, selecting from alternatives and are critical to how we run our organizationsBetter decisions means making more effective, more profitable choices from those available – choices that improve what will happen in the future
  8. Why manage decisions independently of process? What’s the advantage? There are several…
  9. much of a typical mainframe system is static, works fine and needs no maintenance. Often only a small portion of the system is responsible for much of the maintenance work. My suggestion would be to find the COBOL that represents business decisions such as a pricing engine (what price is this product for this customer), eligibility logic (is this customer eligible for this offer or service), approval rules (can this claim be auto-approved) and replace those parts of the application with Decision Services.
  10. [twitter]Focus #decisionmgt systems on repeatable, non-trivial, measurable decisions you want to automate[/twitter]RepeatableDefine timesSame informationDefined set of actionsConsistent measures of successNon trivialPolicies and regulationsDomain knowledge and expertiseAnalysis is requiredLots of data,Lots of actionsTrade-offsContinued changesMeasurable business impactCandidate for automation
  11. What parts will the engineer need to repair this problem?What offer should we make when this person uses the ATM?Is this credit card fraudulent?
  12. [twitter]4 principles of #decisionmgt systems-decisions,transparency,predictive,learning[/twitter]
  13. Discover and Model DecisionsDesign and Implement Decision ServicesMonitor and Improve Decisions
  14. So making decisions correctly will be hard unless we can pull all these rules together.Given this is how rules often look to start with, this is clearly going to be hard.But rules also change…Because your business policies doBecause your competitors doBecause the law doesBecause stock levels doBecause your services and products doBecause your customers doBecause your customers’ needs doSo we need something that will let us collect, manage and update the business rules that drive our decisions
  15. [twitter]A business rules management system #brms is a gr8 platform for #decisionmgt systems[/twitter]
  16. [twitter] analytics in #decisionmgt systems predict risk, fraud and opportunity[/twitter]Risk – credit risk, delivery risk, price risk. Some upside if get right, big downside if get wrongFraud – good fraud decisions really have no effect but bad ones are a loss e.g. credit card fraud or claims fraudOpportunity – not much of a downside but a degree of upside e.g. cross-sell or up-sell
  17. The power of predictive analytics is their ability to turn uncertainty about the future into usable probability
  18. Story about powerpoint modelRisks of models that are done separately and the need to put them to workPredictive models don’t DO anything, they just make predictionsRules make them actionableTaking the rules, for instance, that represent a segmentation and deploying them into a decision makes them actionable
  19. Find the decisions that matter to your business and understand themDon’t start with your data, start with the decisions you need to improve